Global: Wells Fargo Pledges to Strengthen AML Program Following OCC Agreement

Wells Fargo is once again under scrutiny from federal regulators, as the bank has entered into a formal agreement with the Office of the Comptroller of the Currency (OCC) to address significant deficiencies in its anti-money laundering (AML) and financial crime risk management systems.

The OCC, in a statement on Thursday (Sept. 12), detailed the bank’s shortcomings in areas critical to its AML operations, including suspicious activity and currency transaction reporting, customer due diligence, and its customer identification and beneficial ownership programs. These deficiencies, the agency noted, have led to violations of several laws and regulations governing financial institutions.

The agreement calls on Wells Fargo to correct these weaknesses and lays out a comprehensive plan to enhance its AML framework. Specific focus areas include improving internal controls, strengthening risk management practices, and ensuring better compliance with regulatory requirements.

Wells Fargo acknowledged its obligation to implement the necessary changes. “We have been actively working to address many of the concerns outlined in the agreement and remain committed to completing this work with the same urgency as other regulatory commitments,” the bank said in a statement.

This latest agreement comes as Wells Fargo continues to grapple with the aftermath of a 2018 asset cap imposed by the Federal Reserve due to widespread consumer abuses. The asset cap, which limits the bank’s ability to grow, remains in effect, and while the bank has made efforts to resolve those issues, this new compliance problem could delay its removal.

Financial analysts, including Chris Marinac from Janney Montgomery Scott, commented on the situation, stating that the OCC’s latest action shows that Wells Fargo is still facing significant challenges. “The bank has been in a cleanup mode for years, and this indicates that there is still ongoing regulatory scrutiny,” Marinac noted.

As part of the agreement, Wells Fargo must establish a Compliance Committee to oversee the implementation of remedial measures. The bank is required to submit a detailed action plan within 120 days, addressing key areas such as frontline risk management, independent risk testing, and customer identification processes.

Additionally, the bank must enhance its risk assessments, introduce a data integrity program, and further strengthen its overall compliance framework. The agreement also imposes restrictions on Wells Fargo’s ability to expand into new products, services, or markets without prior approval from the OCC until the identified issues are fully addressed.

The agreement underscores the continued regulatory pressure on Wells Fargo and highlights the significant work that remains for the bank to meet its compliance obligations and restore its standing with federal authorities. The OCC emphasized that the agreement is not a binding contract but a supervisory measure to ensure proper oversight. Any amendments or changes to the agreement will require written approval from the OCC.

This development reflects Wells Fargo’s ongoing efforts to rebuild trust and comply with regulatory expectations, as it seeks to resolve longstanding compliance and governance issues.